JP Morgan Dendreon Report
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Dendreon - The Clock Is Ticking On Provenge - ALERT. North American Equity Research.

Dendreon - The Clock Is Ticking On Provenge - ALERT. North American Equity Research.

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JP Morgan Dendreon Report JP Morgan Dendreon Report Document Transcript

  • North America Equity Research 08 March 2012 OverweightDendreon DNDN, DNDN US Price: $10.87The Clock Is Ticking On Provenge - ALERT 07 March 2012This morning, JNJ (covered by JPM Med Tech analyst Mike Weinstein) announced an BiotechnologyIndependent Data Monitoring Committee (IDMC) unanimously recommended AC Cory Kasimovunblinding the Phase 3 trial of Zytiga in pre-chemo metastatic castration-resistant (1-212) 622-5266prostate cancer (mCRPC) pts – the market currently served by DNDN’s Provenge – cory.w.kasimov@jpmorgan.combased on a planned interim analysis that revealed the drug’s positive clinical benefit. Matthew J. Lowe, Ph.D.We believe this outcome was widely expected, but the event materialized earlier than (1-212) 622-0848anticipated (mid-to-2H12). In our view, this development represents a clear hit to matthew.j.lowe@jpmorgan.comDNDN’s sentiment (talk about coming full circle in 1Q alone), and as such, were not Karen Jay, Ph.D.surprised by today’s weakness. Ultimately we believe CRPC pts are likely to receive (1-212) 622-4668several drugs (including DNDN’s Provenge and JNJ’s Zytiga) during the course of karen.e.jay@jpmorgan.comtheir disease (as none of them are “cures”) and note that DNDN is currently J.P. Morgan Securities LLCconducting a sequencing trial with Provenge and Zytiga (data expected later this yr).Today’s news doesn’t impact our valuation as this development was already built intoour assumptions. While our overall view is unchanged, we believe the clock is tickingon DNDN to cement use of Provenge into CRPC treatment practice before approval ofother drugs in the pre-chemo setting. As we’ve been saying for some time, DNDN does NOT have an indefinite amount of time to make Provenge stick. While we expected Zytiga to work in the pre-chemo CRPC setting, this result intensifies the pressure on DNDN to get docs hooked on using Provenge (including the financial benefits of prescribing the product) before other, more traditional drugs are broadly used in this line of treatment (JNJ plans to submit this data for regulatory approvals beginning in 2H12, and we expect US approval in 1H13). In addition, we also expect positive data from MDVN’s MDV3100 in a similar pt population. Flat or decelerating Provenge sales in the coming months/quarters could prompt the remaining bulls to reassess their thesis on DNDN. DNDN’s ultimate goal is for CRPC pts to receive both Provenge and a hormone blocking agent. DNDN recently initiated a study that is evaluating the sequencing of Provenge and Zytiga with results anticipated by year end. We believe DNDN’s ultimate goal is to show that CRPC pts are best off if they receive both Provenge and a hormone blocking agent such as JNJ’s Zytiga or MDVN’s MDV3100. Zytiga trial design. Study COU-AA-302 is an international, randomized, double-blind, placebo controlled study that included 1,088 mCRPC pts who were randomized to receive Zytiga 1,000mg + prednisone 5mg or pbo + prednisone 5mg. The co-primary endpoints of the study are PFS and OS. Results are expected to be presented at an upcoming medical meeting (we suspect ASCO in June).See page 2 for analyst certification and important disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware thatthe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singlefactor in making their investment decision. www.morganmarkets.com
  • Cory Kasimov North America Equity Research(1-212) 622-5266 08 March 2012cory.w.kasimov@jpmorgan.comAnalyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the documentindividually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analysts compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.Important Disclosures Market Maker: JPMS makes a market in the stock of Dendreon. Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Dendreon. Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investmentbanking clients: Dendreon. Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Dendreon. Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment bankingservices in the next three months from Dendreon.Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailingresearch.disclosure.inquiries@jpmorgan.com with your request. Dendreon (DNDN, DNDN US) Price Chart 95 OW $15 76 OW $66 OW $22 Date Rating Share Price Price Target OW $46 OW $28 57 ($) ($) Price($) 22-Feb-10 OW 32.36 46.00 30-Apr-10 OW 54.06 66.00 38 04-Aug-11 OW 11.69 28.00 09-Sep-11 OW 11.40 22.00 19 03-Nov-11 OW 10.46 15.00 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan 10 10 10 10 11 11 11 11 12 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Feb 22, 2010.The chart(s) show J.P. Morgans continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = UnderweightExplanation of Equity Research Ratings and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve months,we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams) coverageuniverse.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocksin the analysts (or the analysts teams) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, eachstock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe canbe found on J.P. Morgan’s research website, www.morganmarkets.com.Coverage Universe: Kasimov, Cory W: Alkermes, Inc. (ALKS), Amylin Pharmaceuticals (AMLN), Arena Pharmaceuticals, Inc.(ARNA), Ariad Pharmaceuticals (ARIA), Array BioPharma (ARRY), BioMarin Pharmaceuticals (BMRN), Clovis Oncology (CLVS),2
  • Cory Kasimov North America Equity Research(1-212) 622-5266 08 March 2012cory.w.kasimov@jpmorgan.comDendreon (DNDN), Emergent BioSolutions (EBS), Exelixis, Inc (EXEL), Geron Corp (GERN), Human Genome Sciences (HGSI),ImmunoGen (IMGN), Incyte Corporation (INCY), Lexicon Pharmaceuticals (LXRX), MannKind Corporation (MNKD), NektarTherapeutics (NKTR), Onyx Pharmaceuticals (ONXX), Orexigen Therapeutics (OREX), Rigel Pharmaceuticals (RIGL), SavientPharmaceuticals (SVNT), Seattle Genetics (SGEN), The Medicines Company (MDCO), VIVUS, Inc (VVUS) J.P. Morgan Equity Research Ratings Distribution, as of January 6, 2012 Overweight Neutral Underweight (buy) (hold) (sell) J.P. Morgan Global Equity Research Coverage 47% 42% 12% IB clients* 52% 45% 36% JPMS Equity Research Coverage 45% 47% 8% IB clients* 72% 62% 58% *Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report at http://www.morganmarkets.com , contact the primary analystor your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com.Equity Analysts Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues,which include revenues from, among other business units, Institutional Equities and Investment Banking.Other DisclosuresJ.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketingname for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.Options related research: If the information contained herein regards options related research, such information is available only to persons who havereceived the proper option risk disclosure documents. For a copy of the Option Clearing Corporations Characteristics and Risks of Standardized Options,please contact your J.P. Morgan Representative or visit the OCCs website at http://www.optionsclearing.com/publications/risks/riskstoc.pdfLegal Entities DisclosuresU.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in theUK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is a member of the London Stock Exchange and is authorized andregulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 125 London Wall, London EC2Y 5AJ.South Africa: J.P. Morgan Equities Limited is a member of the Johannesburg Securities Exchange and is regulated by the FSB. Hong Kong: J.P. MorganSecurities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission inHong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. MorganAustralia Limited (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245234/AFS Licence No: 238066) is a Market Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is aparticipant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India PrivateLimited, having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National StockExchange of India Limited (SEBI Registration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBIRegistration Number - INB 010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities(Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and ExchangeCommission. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK.Philippines: J.P. Morgan Securities Philippines Inc. is a member of the Philippine Stock Exchange and is regulated by the Securities and ExchangeCommission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P.Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is a member of the Mexican Stock Exchange and authorized to act as a broker dealerby the National Banking and Securities Exchange Commission. Singapore: This material is issued and distributed in Singapore by J.P. Morgan SecuritiesSingapore Private Limited (JPMSS) [MICA (P) 032/01/2012 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange SecuritiesTrading Limited and is regulated by the Monetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCBSingapore) which is regulated by the MAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd(18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the SecuritiesCommission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securitiesand Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom ofSaudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number 35-07079and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of Saudi Arabia. Dubai:JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is DubaiInternational Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.Country and Region Specific DisclosuresU.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMSL. 3
  • Cory Kasimov North America Equity Research(1-212) 622-5266 08 March 2012cory.w.kasimov@jpmorgan.comInvestment research issued by JPMSL has been prepared in accordance with JPMSLs policies for managing conflicts of interest arising as a result ofpublication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. Thisreport has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by personswho are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will beengaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) intheir home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. JPMSAL does not issue ordistribute this material to "retail clients". The recipient of this material must not distribute it to any third party or outside Australia without the prior writtenconsent of JPMSAL. For the purposes of this paragraph the terms "wholesale client" and "retail client" have the meanings given to them in section 761G ofthe Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan ChaseBank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as ofthe previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered withthe Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end datafrom two months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivative warrants, callable bull bearcontracts and stock options listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website: http://www.hkex.com.hk.Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case of share trading, and that a loss may occur due to theexchange rate in the case of foreign share trading. In the case of share trading, JPMorgan Securities Japan Co., Ltd., will be receiving a brokerage fee andconsumption tax (shouhizei) calculated by multiplying the executed price by the commission rate which was individually agreed between JPMorganSecurities Japan Co., Ltd., and the customer in advance. Financial Instruments Firms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau(kinsho) No. 82 Participating Association / Japan Securities Dealers Association, The Financial Futures Association of Japan, Type II FinancialInstruments Firms Association and Japan Securities Investment Advisers Association. Korea: This report may have been edited or contributed to fromtime to time by affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of thesecurities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures sectionabove. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued anddistributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposesof their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the public" as determined in accordance withsection 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand without the prior writtenconsent of JPMSAL. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, apublic offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province orterritory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file aprospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively,pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. Theinformation contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored tothe needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under thelaws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securitiescommission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained hereinor the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regardedas professional clients as defined under the DFSA rules.General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co.or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative toJPMS and/or its affiliates and the analysts involvement with the issuer that is the subject of the research. All pricing is as of the close of market for thesecurities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to changewithout notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of anyfinancial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are notintended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its ownindependent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S.affiliates and accepts responsibility for its contents. Periodic updates may be provided on companies/industries based on company specific developments orannouncements, market conditions or any other publicly available information. Clients should contact analysts and execute transactions through a J.P.Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise."Other Disclosures" last revised January 6, 2012.Copyright 2012 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold orredistributed without the written consent of J.P. Morgan. #$J&098$#*P4